Aviva sells RAC for £1bn windfall
Insurer Aviva is expecting a £1 billion windfall following the news that it is to sell its RAC breakdown business to the Carlyle Group.
The decision was prompted by the insurance group's strategic focus on priority markets, including its core insurance portfolio and its savings business.
At £1 billion, the price paid for the RAC brand is 17 times its earnings in 2010.
Group chief executive of Aviva Andrew Moss says: "The sale of RAC is another important step for Aviva and realises significant value for our shareholders.
"Together with the recent partial disposal of Delta Lloyd, it demonstrates clear delivery of our strategy."
Aviva is not, however, severing all of its commercial ties with the brand, remaining involved in a number of key insurance-related ways.
For instance, Aviva will still be the RAC's breakdown insurance partner, as well as underwriting the brand's motor insurance policies.
In a statement on the RAC website, the breakdown service tells its members that there will be no changes to the level of cover they receive.
"We will continue to focus on providing the highest levels of service and great-value products for you," the notice asserts.
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